17 August 2020

The New York Times: “Their Businesses Went Virtual. Then Apple Wanted a Cut.”

With gyms shut down, ClassPass dropped its typical commission on virtual classes, passing along 100 percent of sales to gyms, the person close to the company said. That meant Apple would have taken its cut from hundreds of struggling independent fitness centers, yoga studios and boxing gyms.

Apple said that with Airbnb and ClassPass, it was not trying to generate revenue — though that is a side effect — but instead was trying to enforce a rule that has been in place since it first published its app guidelines in 2010.

ClassPass was told it must comply with the rule this month, according to the person close to the company. Instead, it stopped offering virtual classes in its iPhone app, since those classes were subject to Apple’s commission, according to Apple. As a result, fewer potential customers now see the classes advertised by its gym partners.

Jack Nicas & David McCabe

I linked to this article in my previous entry about the US antitrust hearing, but I still felt it deserved a separate post to highlight the sheer greed of Apple and the chilling effect of monopoly power on economic activity and innovation. Meanwhile, the Apple Music App on Android is requesting its own payment details to avoid paying Google Play’s 30% cut.

But wait, this gets better! From a recent report on Bloomberg, apparently Apple is preparing to launch its own subscription for virtual classes. To recap: Apple discovers a business opportunity from companies offering new services on its App Store; Apple discourages said companies by waving the stick of App Store guidelines and commissions; Apple then enters this new space and claims it as its own because of reduced competition. This is basically the same anticompetitive behavior Amazon is frequently accused of.

The company is also developing a new subscription for virtual fitness classes that can be used via an app for the iPhone, iPad and Apple TV, the people said. That service will be offered in a higher-end bundle with the rest of Apple’s services. Codenamed “Seymour”, the workout package would rival virtual classes offered by companies including Peloton Interactive Inc. and Nike Inc., according to the people.

Mark Gurman

Even Facebook is rallying against Apple on this issue in their announcement of a new feature, the ability for small businesses earn to money from paid online Facebook events:

To support small businesses and creators, Facebook will not collect any fees from paid online events for at least the next year. For transactions on the web, and on Android in countries where we have rolled out Facebook Pay, small businesses will keep 100% of the revenue they generate from paid online events.

We asked Apple to reduce its 30% App Store tax or allow us to offer Facebook Pay so we could absorb all costs for businesses struggling during COVID-19. Unfortunately, they dismissed both our requests and SMBs will only be paid 70% of their hard-earned revenue. While Facebook is waiving fees for paid online events we will make other fees clear in the product.

Fidji Simo

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